Sterling and Wilson Renewable Energy (SWSOLAR) Q2 25/26 earnings summary

Executive summary

• Q2 FY26 results were significantly impacted by one-time legal and financial events, including arbitration losses, settlement payments, and write-offs totaling over INR 600 crore, primarily related to legacy U.S. subsidiary projects.

• Achieved 70% year-over-year revenue growth in Q2 FY26, driven by strong execution in both domestic and international EPC projects.

• Operational EBITDA rose 170% YoY, but Q2 FY26 saw a consolidated EBITDA loss due to a significant one-time write-off from an adverse arbitration ruling.

• Order inflows and unexecuted order value reached record highs, with a robust pipeline and continued expansion into new markets and technologies.

• The group operates primarily in EPC and O&M services for renewable energy projects.

Financial highlights

• Q2 FY26 consolidated revenue was INR 1,749 crore (up 70% YoY); H1 FY26 revenue was INR 3,510 crore (up 80% YoY).

• Gross margin for Q2 FY26 was 8.9%, impacted by lower-margin turnkey domestic orders; H1 FY26 gross margin was 10.3%.

• Operational EBITDA for Q2 was INR 62 crore, but reported EBITDA loss was INR 470 crore due to non-recurring items.

• PAT loss for Q2 was INR 478 crore, mainly due to exceptional write-offs.

• Exceptional items of INR 2,638 crore (standalone) and INR 580 crore (consolidated) were recognized, primarily due to write-offs and impairments related to subsidiaries and arbitration outcomes.

Outlook and guidance

• Revenue growth guidance of 20% for FY26 is maintained, with EBITDA margin guidance for core operations at 4%-6% and O&M margins at 20%-23%.

• Management expects continued strong order inflows and execution, with a robust pipeline in both domestic and international markets.

• Solar installations in India and core international markets are projected to grow strongly through 2030, supporting a positive business outlook.

• Management remains confident of recoverability of certain disputed receivables and bank guarantees, supported by ongoing legal actions and indemnity agreements.